What could make this strong market for coins come to a grinding halt?

ANACONDA · January 30, 2004 10:08PM

What could make this strong market for coins come to a grinding halt?

Just curious.

wingedliberty · January 30, 2004 10:13PM

Outside of a Independence Day type of alien invasion, I don't see it happening. Here is why. , Serious collectors are devoted to this hobby. We live in a stressful society, people need an outlet to relax. I find it more and more, that serious collectors, regardless of the passion, do not compromise on those things that allow them to relax and take a break from the everyday stresses of the world.
When talking about numismatics in particular, more and more collectors are entering the hobby, granted; only a small percentage become serious collectors, but a small percentage of a large number, is still a large number!. and I don't see demand for the flowing hair material that you posted the other day evaporating, considering demand far outpaces supply for choice problem free coinage. Whether its an early flowing hair dollar or a modern commem, this market is nuclear.

SportsModerator · January 30, 2004 10:19PM

When the true collectors stop buying. When it's all dealer to dealer, the handwriting is on the wall

Barry · January 30, 2004 10:23PM

Supply and demand will. As prices continue to rise, buyers WILL slow down. It works just like the stock market. Personally, I've only purchased one "big" coin since the summer. In the auction, I put my bids in and get outbid. I'm not willing to pay what the market is demanding now. I'm sure I'm not alone. As Coinguy1 said yesterday, there's no such thing as a must have coin. I'm willing to wait for the right coin at the right price. I'm in no rush.

DHeath · January 30, 2004 10:23PM

The perception prices are falling. No one wants to catch a falling dagger.

tlhoy · January 30, 2004 10:42PM

<< When the true collectors stop buying. When it's all dealer to dealer, the handwriting is on the wall >>

Then the handwriting IS on the wall!
Hot Springs, AR. coin show!
Glenn

kranky · January 31, 2004 12:18AM

<< The perception prices are falling. No one wants to catch a falling dagger. >>

That's my feeling also. It's all about the perception.

291fifth · January 31, 2004 12:36AM

Don't forget to define the part of the coin market you are talking about. The high end operates largely independently from the collector coin market. It's the high end that is subject to the violent market moves.

LincolnCentMan · January 31, 2004 12:47AM

What could make this strong market for coins come to a grinding halt?

Both PCGS and NGC decide to abandon their registries.

David

dragon · January 31, 2004 12:56AM

One thing I think could temper peoples enthusiasm somewhat could be falling precious metals prices which have basically fueled the runup in generic gold prices IMO.

Generic MS64 $20.00 Libs are priced way too high right now regardless of bullion prices, so are generic MS65 Saints IMO. They have both more than doubled in price in the past 18 months or so and they exist in the 10's of thousands.

The coin market can turn fast both up and down......sometimes there are no clearly defined reasons or growing perceptions........it just seems to turnaround overnight and free falls or shoots up.

dragon

roadrunner · January 31, 2004 1:04AM

Dragon, while tens of thousands may seem like a lot to you and I, its nothing compared to the potential demand if Joe Average becomes interested or some investor/dealer wants to take a huge position and promote them.

Morgan dollars are going to get promoted to $125 each and probably to $175/225 because they can be promoted. Someone is going to make a lot of money on these.

The market can be turned down by:

complete failing of gold back to under $325 for good
resurgence of stocks big time - bull market back on track
failing of a PCGS or NGC in any way
people realizing all at once that certified grades are just an estimate
confiscation of your coins by the govt because you are making more
than 15% on your investment

roadrunner

dpoole · January 31, 2004 1:10AM

I don't see a grinding halt. I see the market taking a breather in some issues that have been hot, and things picking up in lesser-noticed series. If investors with no essential interest in coins enter the market again in force, then a dip in prices (for whatever reason) could force the panic sell-off and the sharp drops we've seen in the past.

agentjim007 · January 31, 2004 1:10AM

If the pyramid can not continue its reach for the sky.

cladking · January 31, 2004 2:14AM

It can't happen until there are more sellers than buyers and short of an ecomnomic
calamity that is very unlikely to happen soon. There is no obvious speculation going
on in the hobby so a selling panic is improbable. This market wasn't built on precious
metals prices so in the unlikely event that they fall it should have little effect on the
market.

Even an economic calamity might not destroy the entire market. Remember that coin
collecting grew briskly during the '30's as many people had a lot of time on their hands
and the hobby was an inexpensive diversion.

Obviously the market will eventually peak and fall and then it will begin acting like it
did in the '65 to '95 era with rotating sectors getting hot and then cold again. The ma-
jor demographic shift underway will cause another decade of a market in flux. In the
mean time there will be a peak in the market. The fall after the peak will be almost sole-
ly dependent on the degree to which speculation was occuring.

tcmitssr · January 31, 2004 2:33AM

I am in almost complete agreement with Barry. I can wait for the big coins I want to come down.

As for other factors that could make things come to an immediate halt, I think these are the same things that would do the same, right away, to the American economy. If Japan or China decided to stop buying American goods, services and bonds right now then you would see the coin market (and the stock market and the bond market and the......) all hit the breaks. The dollar itself is being called on the carpet daily in the financial markets. These are the kinds of things that could end the hot coin market in addition to what Barry mentioned.

I doubt we will see anything like that from Japan or China in the foreseeable future. OTOH, this is a Presidential election year and the economy should continue to run strong until November. 2005 may be a time of finanicial reckoning which will also impact the coin market.

Blackhawk · January 31, 2004 3:23AM

If all the third party graders were together at a convention and someone dropped a bomb on the building, about half of the "collectors" would jump out of the game.

braddick · January 31, 2004 3:34AM

<< 

<< When the true collectors stop buying. When it's all dealer to dealer, the handwriting is on the wall >>

Then the handwriting IS on the wall!
Hot Springs, AR. coin show!
Glenn >>

I read your write-up regarding that show and conclude this: Any show that has "only a handful of NGC/PCGS slabs yet there were NTC by the thousands" is probably a show that is doomed to failure regardless of other factors and is NOT a barometer of the overall Market.

Newmismatist · January 31, 2004 4:15AM

Here's a repeat of what I wrote a few days ago on another thread - I think SportsModerator1 said the same thing in less words.

<< A solid coin market is when collectors are actively seeking coins for their collections.

An over-heated market is when dealers ignore collectors and sell only to other dealers at ever higher prices predicated on the "greater fool theory", and collectors, seeing the "tremendous" appearance (ie illusion) of higher prices, buy coins not for their collections, but to re-sell so they too can participate in the "profit-taking" (ie feeding frenzy). When that happens, (coins being bought by collectors to re-sell for a SHORT term profit), the coin market will collapse, because everyone is trying to sell with no "end" users taking the product off the market. When the collector base is converted to an "investor base", the crash is not far behind.

I don't think we've reached that point yet, but we certainly may be headed in that direction. >>

tradedollarnut · January 31, 2004 4:17AM

Overgrading.

mrfred · January 31, 2004 4:19AM

I just want to reply to something that Roadrunner said; namely that one factor to slow down the market would be:

failing of a PCGS or NGC in any way

Makes we wonder: we've had a lot of discussion about the increasing delays in turnaround time at PCGS (and perhaps the other grading services are going to succumb to the same problem). Is that the beginning of the 'failing'?

Baley · January 31, 2004 4:20AM

I remember reading something about the last big bull market ending suddenly in 1989 at a coin show in the midwest (central states?) Anyway, for some reason, the music stopped, the market topped, and it was all downhill from there. Wall street had something to do with it, and dealer to dealer, and the grading revolution, maybe someone has more info about that peak/crash and we can learn from history instead of being doomed to repeat it?

Wondo · January 31, 2004 4:23AM

<< maybe someone has more info about that peak/crash and we can learn from history instead of being doomed to repeat it? >>

Baley,

If I recall the end came when I finally stretched to make that mega-buy!

Baley · January 31, 2004 4:25AM

oof! sounds like there's a story in there somewhere!

I completely missed the 1989 debacle, I was a senior at UCLA and coins were the farthest thing from my mind. In fact, I didn't buy a single coin from 1983 until 1997, when I returned to the hobby.

What could make this strong market for coins come to a grinding halt?

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